Exam 17: Negotiable Instruments: Negotiability and Transferability

Reference - Banking Problems. Constance and Blair are both loan officers at ABC Bank. Constance, being somewhat dishonest, tells Henry, a customer of the bank who is wealthy and rarely checks the status of outstanding loans and balances, that she is collecting money for a local animal shelter. She asks him to sign a pledge that he will contribute $50 to the animal shelter. In fact, she had him sign a promissory note made out to her for $5,000, which she later endorsed to Richard. Henry proceeds back to one of his businesses, a used car dealership. Taylor comes in to purchase a used car. He and Henry agree that Taylor will purchase a used car for $3,000. Martha also comes in, and she and Henry agree that she will purchase a used car for $4,000. Both Taylor and Martha make out promissory notes payable to Henry. At the end of the day, Henry is looking through the notes and decides that Taylor's was mistakenly made out for $3,000. Henry mistakenly, but honestly, believed that the deal was for $3,500. Therefore, he changes the note to reflect that Taylor owed $3,500. Henry, on the other hand, simply did not like Martha. He decided that $4,000 was not enough for the car. Accordingly, he changed the note to $4,500. Which of the following is true regarding Taylor's liability to Henry?

Which of the following is true in the event an instrument contains more than one endorsement?

Reference - Hot Dress. Doreen writes a check for a dress to Hot Dresses, Inc., a small specialty shop owned primarily by Betty. Betty was getting ready to go on an extended European vacation and temporarily closed down the shop the day after the dress sale to Doreen. When Betty returned, she had a number of other things to do and did not take Doreen's check and some other checks to the bank for three months. Betty was independently wealthy and only ran the shop as a hobby, so she had not been in need of funds. When Betty finally took Doreen's check to the bank, Betty requested that her bank, ABC Bank, deposit the check into her account. When ABC Bank, however, requested payment from Doreen's bank, XYZ Bank, the check was dishonored because of insufficient funds in Doreen's account. Although Betty did not particularly need the funds, she did not like to feel as if she had been cheated; therefore, she demanded that Doreen make the check good. Which of the following is the holder of the check?

Which of the following is true regarding discharge by impairment of collateral?

Identify and describe the two types of digital signatures.

When a holder presents an instrument in a timely and proper manner, but acceptance or payment is refused, the instrument has been ___________.

Which of the following is a person promising to pay a set sum to the holder of a promissory note or certificate of deposit?

If an accommodation party pays a note for an accommodated party, the accommodation party has a right of action against the accommodated party to recover the money paid.

Which of the following is true regarding the liability of an accommodation party?

Which of the following may be considered a commercially reasonable manner by which notice of dishonor can be given to a secondarily liable party?

Which of the following is a person ordering the drawee to pay?

Which of the following is a personal identifier that can be broken into electronic code?

If an instrument is not an unaccepted draft presented to a drawee, which of the following presentment warranties is applicable?

If the party that dishonors an instrument is a collecting bank, when must notice of the dishonor be given to a secondarily liable party by the collecting bank?

The fact that an instrument has been refused by a bank means that it has been dishonored.

Under the UCC, how can proper presentment be made?

Which of the following is the principle that if an item is transferred from one person to another, the transferee acquires all the rights to transfer or have in the item?

Which of the following is a party who is in possession of an instrument that is payable to the party or to the bearer of the instrument?

Which of the following prevents a holder from being a holder in due course?

When will a party's negligence not permit the party to escape liability for an unauthorized signature?